Events

Max Planck Institute for Innovation and Competition, Munich, Room 313
 

Given the relevance that governments and public bodies give to the patent system, there is surprisingly little evidence on the actual role played by patent rights in stimulating knowledge diffusion and the generation of follow-on innovations. The main objective of the present paper is to provide new, robust evidence on this research topic. To this aim, we take advantage of a body of United States federal law enacted in 1951 with the objective of preventing disclosure of new inventions that may represent a threat to the national security. Estimation results show a negative and statistically significant relationship between the enforcement of a secrecy order and knowledge diffusion, thus supporting the idea that the patent system is conducive to technology diffusion (joint work with Laurent Bergé and Thorsten Doherr).

Contact: Rainer Widmann, Ph.D.

Max Planck Institute for Innovation and Competition, Munich, Room 313

Decision-support systems can influence people in various domains of life. Firms have started implementing these systems via chatbots and other natural language-based assistants. While benefiting from these services, individuals provide sensitive and valuable data to the private industry. Using this data, companies may generate additional profits. Moreover, by making their data available, individuals may also promote the common good. Policymakers should provide efficient tools to let the public collectively benefit from their data. This paper provides first insights on how people may voluntarily provide data to a decision-support system in order to contribute to a social good. In particular, we have designed three online studies to test (1) whether providing personal data to a decision-support system for a common good is a social dilemma, (2) how the willingness to voluntarily provide data is subject to the risk of data getting leaked, the effectiveness of data provision, the developing party and the human-supervision of the underlying algorithm and (3) how differences in cognitive moral judgment (reason-based/ emotion-based) and the perceived moral obligation to provide data for a common good effect the willingness to make data available. In all studies, we compare two social goods: a sustainable environment and a sustainable health system.

Contact: Dr. Michael Rose

Max Planck Institute for Innovation and Competition, Munich, Room 313
 

The FDA maintains post-approval safety surveillance programs to monitor the safety of drugs. As adverse events are reported, they may choose to intervene and change the safety labeling associated with a drug. How do markets respond to these regulatory changes? We provide causal evidence that these regulatory interventions have a negative impact on aggregate demand for pharmaceuticals. We find that aggregate demand declines by 16.9 percent within two years of a relabeling event. After accounting for all plausible substitution patterns by physicians along with competitor actions, aggregate demand declines by 4.7 percent. Critically, this decline represents consumers that leave the market. The overall effect appears to be driven by ‘high-intensity’ markets or those with significant relabeling activity. Results control for the level of advertising and are robust to variation across types of relabeling, market sizes, and levels of competition. Implications for upstream innovation and public policy are highlighted (joint work with Xin Yan and Chirantan Chatterjee).

Contact: Michael Rose, Ph.D.

 Max Planck Institute for Innovation and Competititon, Room E10

Max Planck Institute for Innovation and Competition, Room E10

Blockchain technology promises to deliver on the ideal of decentralization but faces the challenge of being compatible with existing legal systems so as to facilitate wider adoption. In the copyright domain, different elements may be represented by cryptographic tokens: works, ownership metadata, licensing terms and remuneration. This presentation will examine the impact of blockchain technology on copyright law like the differences between the new, smart-contract-based private ordering regime and the fundamental components of copyright law, such as exceptions and limitations or the doctrine of exhaustion. It will dig deeper into the real-word application of different blockchain solutions for copyright-protected content, namely in the online music sector.
 

Dr. João Pedro Quintais, LL.M is a qualified lawyer in Portugal and postdoctoral researcher and lecturer at the Institute for Information Law (IViR), University of Amsterdam. His research focuses on information law matters, including intermediary liability, intellectual property and the application of copyright in the online environment. He is a member of the Blockchain & Society Policy Research Lab and Managing Editor of the Kluwer Copyright Blog.

Contact:
Michèle Finck, Valentina Moscon

Max Planck Institute for Innovation and Competition, Munich, Room 313

While economic theories (e.g. Hicks (1932); Acemoglu (2010)) suggest substitutability between labor and automation innovation, the relationship between labor supply and investments into automation innovation has so far escaped empirical examination. We analyze the local impact of changes in labor factor endowments on innovative activities by exploiting a placement policy that led to exogeneous inflows of immigrants during the 1990s and 2000s in Germany. Our results indicate that these positive shocks of low-skilled labor supply were followed by an absolute as well as relative decline in automation innovation. This pattern is consistent with the substitutability hypothesis on labor and labor-saving innovation. Subgroup analyses reveal effect heterogeneity by pre-existing labor market tightness. We further show that these inflows did not impact the level of non-automation innovation.

Contact: Michael Rose

Max Planck Institute for Innovation and Competition, Munich, Room E10

Hasty Buyers? Target Age in Times of Technology Hype

Speakers: Tobias Hlavka and Joachim Henkel (both TU Munich)

Choking Under Pressure - The Effect of Asymmetric Contests on Stress and Performance

Speaker: Jonas Heite (Max Planck Institute for Innovation and Competition)

Max Planck Institute for Innovation and Competition, Munich, Room 313

By issuing patents, society grants an inventor temporary monopoly rights in exchange for the disclosure of the patented invention. If, however, what is patented is otherwise already visible to society, and what is otherwise not visible is kept secret by the inventor, then the bargain fails. We use exogenous variation in the strength of trade secrets protection from the Uniform Trade Secrets Act to show that patenting of processes is more adversely affected than that of products when patenting becomes relatively less attractive (compared to trade secrets). Arguing that processes are on average less visible (or self-disclosing) than products, stronger trade secrets have thus a disproportionately negative effect on the disclosure of inventions that are not otherwise visible to society. We then develop a structural model of initial and follow-on innovation to determine the impacts of such a shift in disclosure on overall welfare in industries characterized by cumulative innovation. In counterfactual analyses, we find that while stronger trade secrets encourage more investment in R&D, they may have negative effects on overall welfare - the result of a significant decline in follow-on innovation. This is especially the case in industries with relatively profitable R&D.

Contact: Fabian Gaessler

Max Planck Institute for Innovation and Competition, Room E10

Moderation: Heiko Richter

Max Planck Institute for Innovation and Competition, Room 313

Schumpeter claims that recessions are periods of “creative destruction”, concentrating innovation that is useful for the long-term growth of the economy. However, previous research finds that standard measures of innovation, such as R&D expenditures or number of patents, concentrate in booms. We argue that these standard measures do not capture the different dimensions of firms’ innovative search strategies. We introduce a model of innovative exploration and exploitation over the business cycle and find evidence that exploitation strategies are more prevalent in booms while exploration strategies are more prevalent in recessions. Results are stronger for more cyclical and less financially constrained firms. In contrast to the Schumpeterian view of creative destruction, we show that young and old firms contribute equally to the countercyclicality of innovation. Taken together, these results raise questions on macroeconomic stability as a policy goal.

Contact: Fabian Gaessler